A Proposed Definition of Market
Over several posts, I have criticized standard economic textbook definitions of market, here and here. I neglected to mention one, the idea that markets are an emergent phenomenon; here’s a discussion of that lunatic definition. Here’s my proposed definition:
A market is the set of social arrangements under which people buy and sell specific goods and services at a specific point in time.
Social arrangements means all of the things that constrain and organize human action, including laws, regulations, social expectations, conventions, and standards, whether created or enforced by governments, institutions or local traditions.
The point of this definition is that it focuses attention on the actual attributes of our intuitive understanding of the term.
1. All buying and selling is done in a social setting. The image of the lone white male creating a business all by himself in the face of monolithic government resistance is just as brainless as the image of the perfectly free individual moving in a consumer wonderland picking and choosing the things that will provide the greatest happiness. All businesses are social activities with social ramifications, and all require the actions of others than the towering ego of one person.
2. Each act of buying and selling is a separate act, done separately in time and space. The act of aggregating purchases and sales is thus left out of the definition. That is a political act, and by separating the definition from the aggregation, we force the statistics users to state their principles of aggregation. That puts us into a position to evaluate both principles and purposes behind the statistics, and to judge the success of the endeavor.
3. The principle constraints on buying and selling are set up by people. They don’t evolve out of the mists of time, or come to life in the mind of someone contemplating the natural order of things, or emerge from the underlying acts of buying and selling, and they don’t have to stay the same from time to time. We don’t have to live with the rules inflicted on us by the people who create the monopolies, oligopolies, patent restrictions, right-wing courts, captured agencies, and all the other tools of neoliberalism for making the rich even richer at our expense.
4. In the definition, I purposefully chose to insert the words “conventions” and “standards”. These words expose the fact that people have expectations about how things are supposed to work, and are angered when they don’t. In our neoliberal world, we aren’t supposed to notice that the CEO class takes all the rewards of the hard work of thousands of other people. We’re supposed to be cynical and say that society isn’t entitled to such expectations. We’re supposed to call the screwing of the public in the Great Crash greedy but not illegal. We aren’t supposed to be angry. But, as Whiner-In-Chief Jamie Dimon has dimly noticed, the anger is white hot, and isn’t going away, even as bank profits and greed go through the roof.
I think the most important thing this definition does is to demonstrate what markets can’t do. They won’t solve any of the important problems facing our society. Mainstream textbooks talk about several kinds of market failure: externalities like pollution and noise and fracking water dumped into the aquifers that provide irrigation and drinking water; monopolies and oligopolies sanctioned by the courts and administrations of every neoliberal variety, for example. These are different from market imperfections, for example, where there are large economies of scale, or high barriers to entry. See Samuelson and Nordhaus, Economics, Ch. 9, 2005 ed. Economists offer some vague and unimpressive government solutions to these problems, but the neoliberals reject them, saying that only markets can solve our problems, and us idiots need to step aside and let them work.
As my definition shows, markets operate on a case by case basis. They make no provision for the future. To the extent that they do, it’s because individuals themselves give some thought to their future. This point did not escape the sharp mind of William Stanley Jevons, who devotes a section of his discussion of utility to dealing with the obvious fact that an individual’s ability to enjoy pleasure and escape pain requires a regular and continuing supply of various commodities. He gives a clever illustration of using the available resources when future supplies are uncertain. Jevons, The Theory of Political Economy III.47-49, 59 et seq.
In this post I try to show that there is no reason to think that markets even meet the limited test of utility maximization set up by Jevons; and we haven’t even discussed the problems with his definition of utility. With my definition of market we can see why. Each transaction happens in a moment. At most, it can come close to maximizing utility for that point in time for the persons transacting. It says nothing about the future.
Perhaps some of the people buying or selling are thinking about their future needs closely and carefully. But the point is that they only are maximizing their personal utility at a point in time. Jevons makes this clear in his definition of utility when he adds this qualifier:
This perfectly expresses the meaning of the word in Economics, provided that the will or inclination of the person immediately concerned is taken as the sole criterion, for the time, of what is or is not useful.
Let’s remember that for Samuelson and Nordhaus, modern economics as taught to college students flows from Jevons and other neoclassical economists. See the back inside cover of Economics, 2005 ed. Neoclassical economics is the foundation of neoliberal economic theory as well, and the latter is nourished by both the training given in college to non-economics majors and all of the public discussion of economics by trained and untrained people. Again, the claim is that markets will solve any and all problems.
But they obviously won’t. Whatever else we know about markets, and it isn’t much beyond a few obvious general ideas, we know that markets are reactive, responding to news or immediate needs. They have nothing to do with long-term problems. They have no predictive capacity. Which market predicted that the oceans would fill up with plastic crap? Which market predicted that the earth would warm up to the point that it became uninhabitable to humans? What fixes do these wizard markets offer?
They offer nothing. In the end, the only thing these ideological markets do is give the richest people control over the outcomes. The Koch brothers with their John Bircher background hate democracy, and use their money to influence the social arrangements that create and constrain buying and selling to benefit themselves. In the end, they and their ilk are the people who decide how we will deal with poisoning the oceans, the aquifers, the fresh water lakes and the atmosphere. And they’ll do it with their markets. And they’ll do it with the praise of the majority of citizens who believe in their foolish theories of markets. And the only people, if any, who will benefit are the filthy rich.
That’s why we need to stop talking about the markets in the terms defined by the rich and their pet academics, and start focusing on reality.
Why is market abstracted from a specific location or space?
If I were modeling this, I would have a market ID, date and time, a list of the social arrangements that constrain, and a list of the social relationships that organize a particular market. Each item of the list of constraining social arrangements would point to the specific list of contraints drawn from that specific social arrangement filtered for applicability to the specific market. Each item of the list of organizing social arrangements would point to what? A set of organizational whatits? People or legal entities as nodes? Permitted actions? Required actions? Relationships as connections? Coaseian entities as black boxes? What exactly is the import of the “organizing” term in the definition?
Are the mundane meanings of “goods” and “services” unambiguous enough?
What exactly is “buy” and “sell”. They are tossed around so easily in the abstract, but the actual social experiences vary widely. What exactly is “hiring”? Or is the buying and selling of labor limited to slave markets? What nexus of social arrangements engages people, skills, attention, workplaces, and work? Maybe it is not a market. Are leasing or renting actions within the model?
“constraining and organizing human action”
This is the point at which you take on von Mises IMO.
Nice work, Ed.
I’ve been thinking about the labor “market” as a good example of the differences between the definitions, along with health care and education. Historically, all three were treated differently from each other, and certainly differently from the market that satisfies the Samuelson-Nordhaus one size fits all definition.
One of the main things that differentiates these definitions is that for the neoliberals, and possibly other schools, not everything is treated as a proper subject for buying and selling. Besides these three, air and water are not really proper subjects for private gain. As to the former, see Total Recall, the Arnold Schwartzenegger movie set on Mars, where air is controlled by a either a commercial entity or a corrupt government. As to the latter, see The Price of Thirst, by Karen Piper, a chilling discussion of the efforts of multinational groups including the World Bank to force water privatization.
These ideas will require some further fleshing out, I think.
Ed;
you would love Never Let a Serious Crisis Go to Waste, by Phillip Misowski
a great deconstruction of the intellectual underpinnings of neoliberalism
I really like this book. I wrote several posts about it at Firedoglake, and it is the inspiration for much of what I am writing about now.
Mirowski is a fascinating thinker. He teaches at Notre Dame, my Alma Mater, and the place where I first read economics in a really great intro to economic history course taught by someone whose name I can’t remember, sadly. That course persuaded me that I shouldn’t become an economist, and led me directly to law. Now I find myself back, but hopefully with a different intellectual toolset.
Anyway, I linked to this paper by Mirowski: http://mysite.avemaria.edu/gmartinez/Courses/ECON310/pdf/Mirowski_Physics_and_the_marginalist_revolution.pdf, it’s really interesting. He explains an early example of economics colonizing an area of hard science.
Ed, Speaking of colonizing areas of hard science, much of what you write interests me in that it seems the the “science” of Economics is bogged down in poorly organized concepts. I see you as attempting to sort through some of them. In behavioral psychology there is a fundamental view that what there is to study is behavior, and that all behavior takes place in a context. This context consists of all the spacial, temporal, social (including verbal), emotional, as well as historical factors. So I suggest you start not with nouns, but with verbs. That is, not with market, but with marketing. It’s what people actually do, and it lends itself to empirical observation. Then recognizing that what is done is a matter of operating in an environment, what one then needs to do is analyze what sorts of conditions give rise to which sorts of actions. These conditions include consequences of such actions (which as you noted, could be either short or long term consequences, or both). This should provide a start; I don’t wish to sound preachy. It can lead to a broader way of thinking; for example sexually transmitted diseases, fracking, and crap in the ocean are the products of short term focus on the rewards of immediate behavior, and not on more temporally delayed consequences. Giving rise to (to some of us) a need to alter the verbal conditions (regulations) that control the context of marketing. Good luck with your adventure. Also you may enjoy reading the thinking of another adventurer, Ernst Mach.
There’s a lot to think about here. First, I agree that the economics at the level most people understand it is bogged down in poorly defined concepts. That makes it easy for ideologues to use it to push for their desired outcomes, and for people to think they are acting in a rational way when in fact they aren’t. Worse, there isn’t any need to set up a society in which failure to meet some minimal test of rationality means bankruptcy or serious financial problems, any more than a need to set up a society in which the solution to every problem is unemployment for the average person to maintain unreasonable wealth for the few.
Piketty talks about the importance of working alongside the other soft sciences with an open mind to sociology, history and psychology among others. Economists traditionally have been drawn to the hard sciences. As the Mirowski paper I linked says, Jevons and the other neoclassical thinkers were mesmerized by the success of physics in explaining complex phenomena and tried to adapt it to buying and selling. I’m not familiar enough with those areas to be useful, so I focus on a more philosophical/lawyerly approach: trying to make sense of the concepts already in use.
You discuss the importance of grappling with the long-term consequences of our actions, and as you obviously see, economics doesn’t seem to have a clue about how to integrate that kind of thinking into its methods. The baby steps taken by behavioral economists in their lab experiments seem badly thought out, and are not persuasive. Closer collaboration between them and their better trained colleagues in the psychology departments would be a good first step.
From my perspective, it seems like the neoliberals aren’t interested in the way people actually behave. Instead, they want to restructure humans to make them more like their models: rational agents competing with each other over scarce resources in unforgiving market structures, with prison as the alternative for those who don’t want to play along with their vision of markets, or who are unable to compete. This I take to be the lesson of Foucault, Harcourt and Mirowski, who have read the likes of R. Posner, Epstein, Becker and others very closely, and observed the outcomes of their successful hijacking of the political system.
Perhaps that helps understand the approach I take.
“… From my perspective, it seems like the neoliberals aren’t interested in the way people actually behave. Instead, they want to restructure humans to make them more like their models: ..”
i think that the criticism can be (and has been) made of much economic theory to date that it involves tools in search of a task, hammers in search of a nail (as the tool of calculus was applied to the psuedo-reality of marginal choice).
it is generally accepted these days that no science proceeds fruitfully when it is based in a priori, deductive thinking, rather than fact gathering, fact sifting, and, then, theory construction by many minds over long periods of time. in economics, the behavioral economists seem to be moving in the right direction; there may be others, as with the study of the growth of underdeveloped economies.
Accounting is another option.
the government deficit = non-government surplus to the penny
Below is from an economist at Bard College, Paulina Tchernova, Ph.D.
…So, take your pick: would you like the private sector to be in surplus or the government? You cannot have both. Presumably, we’d prefer the private sector to save and accumulate financial assets, which means that the government must run a deficit and accumulate financial liabilities. …
http://pavlina-tcherneva.net/2-key-charts.pdf
Forbes ran this in January by another economist, Steve Keen, Ph.D., who makes the same point.
“Beware of politicians bearing household analogies”
http://www.forbes.com/sites/stevekeen/2015/01/14/beware-of-politicians-bearing-household-analogies-3/
I’m starting to have a real problem with your posts: you carelessly (or is it intentionally?) intermix “teaching” with “whining/bitching/screed”. The latter part of it really, truly, detracts from your ability to educate, to convince people of the correctness of the underlying subject matter your are propounding. Here’s a few examples from today’s post.
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First, tell me how the last sentence of this following paragraph “belongs with” (or follows from) the rest of the paragraph. I don‘t think it does – at all. It strikes me as simply you “whining”, just as you accuse Dimon of doing.
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3. The principle constraints on buying and selling are set up by people. They don’t evolve out of the mists of time, or come to life in the mind of someone contemplating the natural order of things, or emerge from the underlying acts of buying and selling, and they don’t have to stay the same from time to time. We don’t have to live with the rules inflicted on us by the people who create the monopolies, oligopolies, patent restrictions, right-wing courts, captured agencies, and all the other tools of neoliberalism for making the rich even richer at our expense.
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Example 2. This paragraph (following) starts out well, then degenerates into yet more whining. Is there some reason you can’t give examples that are more neutral? In this paragraph, are you trying to explain (which is a good thing technically) or are you trying to inflame?
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4. In the definition, I purposefully chose to insert the words “conventions” and “standards”. These words expose the fact that people have expectations about how things are supposed to work, and are angered when they don’t. In our neoliberal world, we aren’t supposed to notice that the CEO class takes all the rewards of the hard work of thousands of other people. We’re supposed to be cynical and say that society isn’t entitled to such expectations. We’re supposed to call the screwing of the public in the Great Crash greedy but not illegal. We aren’t supposed to be angry. But, as Whiner-In-Chief Jamie Dimon has dimly noticed, the anger is white hot, and isn’t going away, even as bank profits and greed go through the roof.
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Example 3. Again, this following paragraph degenerates:
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I think the most important thing this definition does is to demonstrate what markets can’t do. They won’t solve any of the important problems facing our society. Mainstream textbooks talk about several kinds of market failure: externalities like pollution and noise and fracking water dumped into the aquifers that provide irrigation and drinking water; monopolies and oligopolies sanctioned by the courts and administrations of every neoliberal variety, for example.
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Honestly, why do you have to vent about “monopolies and oligopolies sanctioned by the courts” etc.? You were making a good point, then you “lost it” in rage.
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Last example: This following paragraph makes many good points but has some real clinkers in it, as I note in brackets.
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“They offer nothing. In the end, the only thing these ideological [where did that word come from, it’s not supported by anything you said before?] markets do is give the richest people control over the outcomes. The Koch brothers with their John Bircher background [How is that relevant, please? Why do you choose to defame rather than teach calmly?] hate democracy, and use their money to influence the social arrangements that create and constrain buying and selling to benefit themselves. In the end, they and their ilk are the people who decide how we will deal with poisoning the oceans, the aquifers, the fresh water lakes and the atmosphere. And they’ll do it with their markets [really? What are “their markets”? Can you explain, rather than simply accuse and leave?] And they’ll do it with the praise of the majority of citizens who believe in their foolish theories of markets. And the only people, if any, who will benefit are the filthy rich. [If you had said “the rich” you would have sounded sensible. But throw in “filthy” and you don’t; you sound pissed off, instead.]
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If you were a student in a class where the teacher would regularly say five good honest well thought out sentences and then explode in anger at the unfairness of life, wouldn’t you eventually tire of listening to him and start to dismiss what he says because you can’t really trust him? Everything you say here, can be said coolly and calmly and in a solid educational manner, without the ranting; truly, you diminish your work by doing that. Perhaps everyone you hang with feels that way and so is not upset when you act out. But I assume you are trying to reach a new audience here, and are trying to convince them with intellectual rigor. You can’t do that if you are so blatantly biased. Give me facts, rational arguments, and convince me. Otherwise, people like me, who want to learn, and who want to be able to separate learning from indoctrination, will simply leave and not come back.
does another speaking out angrily bother you so much you have to post your own covertly angry screed?
your comment strikes me as a classic example of the inhibited, conventional political commentary characteristic of “civil boys and girls” who speak most comfortably, head humbly bowed, in mewling phrases, so as never to offend.
you may threaten walker with loss of listeners if he does not conform to your style of critical speech (“… Give me facts, rational arguments, and convince me. Otherwise, people like me, who want to learn, and who want to be able to separate learning from indoctrination, will simply leave and not come back…”), but for every simpering “NYTimes efitorial writer” like yourself” who flees an instance of strong language, there will be another like me to take your place.
Thank you for your reply. Here are my comments.
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“Does another speaking out angrily bother you so much you have to post your own covertly angry screed?”
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What do you see as the purpose of his post? The posts of emptywheel and bmaz and jimwhite are 99.5% educational, and 0.5% “my opinion”. Not so here – it just doesn’t fit in, in that regard. That’s one reason it bothers me. Others are discussed below.
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“your comment strikes me as a classic example of the inhibited, conventional political commentary characteristic of “civil boys and girls” who speak most comfortably, head humbly bowed, in mewling phrases, so as never to offend.
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I said repeatedly that I was trying to learn the underlying economics from the post, and that the “speaking out angrily” distracted from that by causing me to think that he is biased and thus not trustworthy as a teacher. Did you miss that as the theme? If so, I’ll try to be more careful next time. That’s the key point. Just because someone yells and screams angrily does not make him untrustworthy. It’s the degeneration into statements like “right-wing courts, captured agencies, and all the other tools of neoliberalism for making the rich even richer at our expense” that gives me pause. For example, how can I, going forward, trust ANYTHING he says about courts, for example, or agencies, now that he has disowned them? There are clear arguments to be made that in fact the courts or agencies are stacked against the common man; why does he choose not to make them? And, how is that fact relevant to what he is saying in the post about Markets which is the whole point of the post?
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you may threaten walker with loss of listeners if he does not conform to your style of critical speech (“… Give me facts, rational arguments, and convince me. Otherwise, people like me, who want to learn, and who want to be able to separate learning from indoctrination, will simply leave and not come back…”)
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The only listener I can make him lose is me, of course. And it’s not a threat, but a statement of fact, because I have no ability to make it happen other than for me. “Threaten” is a strong word, be careful when you use it. I did not threaten; don’t accuse me of that.
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but for every simpering “NYTimes editorial writer” like yourself” who flees an instance of strong language, there will be another like me to take your place.
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So you are already a member of the choir to whom he appears to be preaching? That’s fine. I’m not necessarily there yet. Want to get me there? If so, then convince me rationally, not by “speaking out angrily”. I don’t flee from strong language; I flee from bias and lack of trustworthiness.
for your benefit, and action should you choose,
i use, once more, the word “threat” –
[…. you may threaten walker with loss of listeners if he does not conform to your style of critical speech (“… Give me facts, rational arguments, and convince me. Otherwise, people like me, who want to learn, and who want to be able to separate learning from indoctrination, will simply leave and not come back…”)
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The only listener I can make him lose is me, of course. And it’s not a threat, but a statement of fact, because I have no ability to make it happen other than for me. “Threaten” is a strong word, be careful when you use it. I did not threaten; don’t accuse me of that …].
you threaten like a sunday school teacher, bloopie2.
[… I said repeatedly that I was trying to learn the underlying economics from the post, and that the “speaking out angrily” distracted from that by causing me to think that he is biased and thus not trustworthy as a teacher. Did you miss that as the theme? …]
your claim, bloopie2, is that walker commenting at “emptywheel” is responsible for YOUR behavior ? hmmmmm.
instead of attacking walker’s particular style of speaking his mind, bloopie2, why don’t you acknowledge your bias against the substance of his commentary; i would consider that more honest of you.
“..If you were a student in a class where the teacher would regularly say five good honest well thought out sentences and then explode in anger at the unfairness of life, wouldn’t you eventually tire of listening to him and start to dismiss what he says because you can’t really trust him?…”
really, bloopie2 ? a person who explodes in anger at the unfairness of life can’t be trusted?
what perverse emotional environment washed your brain?
really, bloopie2 ? a person who explodes in anger at the unfairness of life can’t be trusted?
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Yes, I do believe that, in this particular circumstance – I didn’t say it as a general rule for all speech at all time. Would you trust an economics teacher, who is trying to explain to you how markets work, but who as part of that lesson says without explanation that the existing markets are biased against the common man? I wouldn’t. I would want him to teach me about economics and markets first, so that I can make my own judgment on that point, after I have learned enough. I don’t see that happening here. Again, for example, how can I trust anything he tries to teach me about courts, when he calls them “right wing courts”?
Very simple definition: A market is where “people are exchanging goods and services to improve collective welfare.”
Thus a conference, volunteer work, and data entry are all activities that involve participation in the market.
Besides, the current definition is designed to promote taxable activity.
I’m surprised there was no discussion of supply and demand or inflation and the impact of constraints on markets, such as monopoly pricing and shortages. Here is where the oligarchs and other natural phenomenon play.
You are obviously very upset at the oligarchs and the greedy bastards that gambled us into the great recession and the great depression. But the impacts of these oligarchs, what and how they did it, could have been stated in a more dispassionate way. I do agree the oligarchs are interested in only themselves and they will do whatever is necessary to get it. McKinley was not the first president they bought. Just watch 2016.
Two key challenges we must tackle:
— Though markets appear defined by buyers and sellers, the market is a cooperative of stakeholders, not shareholders representing the buyers and sellers.
— Externalities do not exist if they arise from the market process. Toxic waste, for example, is NOT an externality, even if it has accrued over time. It is produced, and must be accounted for up front in the social arrangement as integral to the cost of goods sold.
At the risk of being repetitive, I’ll repeat myself.
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“really, bloopie2 ? a person who explodes in anger at the unfairness of life can’t be trusted?”
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A teacher in a classroom should not do that, especially on the topic he is teaching at the moment. That’s what I see this site as – a classroom, not an opinion blog. If I’m wrong, let me know.
[ …“really, bloopie2 ? a person who explodes in anger at the unfairness of life can’t be trusted?”
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A teacher in a classroom should not do that, especially on the topic he is teaching at the moment. That’s what I see this site as – a classroom, not an opinion blog. If I’m wrong, let me know. …]
what a nice little argumentative two-step you’ve manufactures here , bloopie2.
and yes, you are wrong.
the “emptywheel” weblog is not a classroom; it is an “opinion blog”, but you could not possibly have failed to previously observe that.
If your child were learning science in elementary school, and the child came home one day and said that the teacher taught her a bunch of stuff and then taught her that “the earth is flat, and all those photos from space are faked”, wouldn’t you ask, “Wait a minute, what else did has that teacher supposedly “taught you?” Wouldn’t you be skeptical, and nervous about what your child has been learning from that teacher? And wouldn’t you maybe even go before the administration or school board to question whether that teacher ought to be teaching?
a truly inane comment, bloopie2;
ed walker is not teaching “flat earth” economics.
he is criticizing a part of traditional economic theory.
clearly, it is his criticism that angers you.
“a truly inane comment, bloopie2; ed walker is not teaching “flat earth” economics. he is criticizing a part of traditional economic theory. clearly, it is his criticism that angers you.”
If that’s your takeaway from my comments, then you really are too stupid to understand written English. No wonder you like the rants and raves – more your speed – as compared to the reasoned statements.
ah, bloopie2,
you really are the troll i suspected you to be
for trolls, you see,
twist language frightfully,
as you have twisted language here, repeatedly.
as for your assertion in #28 that you construct “reasoned restatement i”, your own comments here together with your repeated evasions of criticisms of those comments gives the lie to any such claim.
your m.o. bloopie2, is to write something inane and then to avoid any response that calls your foolishness to account.
i am familiar with that m.o.; i have observed and responded to it before – when you were commenting here under a different psuedonym.
good luck with your future evasions and deceits, troll.
does the name stephen salaita ring a bell with you, bloopie2 ?
if not, some background here:
https://en.m.wikipedia.org/wiki/Steven_Salaita
professor of political science corey robin has written a good bit more, in the “opinion style” you so abhor, regarding the sophistry and intellectual dishonesty behind the attack on professor salaita.
the attack you have proposed on the teacher in your comment #19 at 9:29 a.m. concerning “flat earth” (economics) teaching is of the same repressive ilk. it is what is done routinely in this country these days by our anti-evolution and anti-climate change bretheran. would you be one of these?
thank you for revealing so much about your thinking processes, bloopie2.
corey robin’s weblog – a weblog of opinion :)) – is here :
http://coreyrobin.com/2014/12/15/nyt-weighs-in-on-civility-and-the-salaita-case/
together with his latest commentary on the salaita injustice.
check his columns from september – december 2014 for others.
along with one of his later (in chronology) columns on the professor stephen salaita
You say, “the “emptywheel” weblog is not a classroom; it is an “opinion blog”, but you could not possibly have failed to previously observe that.”
So when JimWhite presents a lot of information about what’s happening in the Middle East, that’s just his opinion, and I don’t have to believe any of it? And when emptywheel presents a lot of information about what some spying documents say and what some spy said in a speech to Congress, that’s just her opinion and I don’t have to believe it? You’ve got to be kidding.
again, an astonishingly inane comment.
thank you, bloopie2, for revealing the quality of your thinking process in these exchanges; you almost had me fooled.
Anyhow, people who use the handle “orion” aren’t to be believed, we all know that. If you disagree, prove otherwise.
a hat trick, bloopie2.
Economics cannot be divorced from politics, no matter how many mathematical formulae one interposes between them. The idea of the “market” is being used to define acceptable topics for economic and social discussion and political action. Anything not of, by or for the market is beyond the pale, idiosyncratic, even subversive, and unfruitful or dangerous to discuss, like “communism” in the fifties.
Constipated definitions for and purposes of the “market” are used to limit the role of government, to keep it from using its power to restrain corporate excess. It is meant to hobble people from acting through their government as one means to improve the conditions of their lives. If successful, this would leave the influencing of government to larger corporations, who know better.
No matter how they abuse definitions of the “market”, large corporations, acting directly and through their lobbyists, rarely refrain from attempting to bend government to their exclusive purposes. They have succeeded in gutting economic regulations and social programs, expanding deferred prosecution agreements, adopting wholesale tax avoidance as a revenue stream, and obtaining tax subsidies for even the most lucrative industries. They just don’t want anyone else playing that game, certainly not their employees, unions, customers, suppliers or the communities within which they live and work.
as a practical matter mentioning the discipline of economics these days often brings “markets” into the discussion as well since labor markets, foreign exchage markets, mortgage markets, raw materials markets, etc can have great impact on our lives. for this reason governments and markets can become front-and-center in politics – as is the case in greece these days.
i’m concerned about the impact of manipulated markets on our society, but i am also concerned that economics become a more useful social science discipline which cannot happen as long as its foundations of are sinking in “economic philosophy”, deductive inference, and academic opportunism.
economics with a strong inductive foundation will go a long way toward combating exploitation for political advantage, just as a strong empirical foundation for evolution, geology, and climatology have protected our society from political exploitation in these areas.
Orion, I apologize, I shouldn’t have said that.
The rules of political economy are not natural laws, but are man-made conventions. As currently set up, our economy benefits a few wealthy individuals at the expense of the rest of us. If we are not satisfied with this, the rules can be changed to generate different outcomes. This ain’t rocket science. In fact it’s not science at all, it’s policy.
The only economist that my Mom said that she really respected was Douglass North, because he understood that institutions mattered. This may now parallel TarheelDem @1, but the post seems to say that the market is the set of institutions. Someone, even me, may have to actually go to the library and find out if North agrees with that.
I am thinking out loud off TarheelDem and the labor market. The labor market first of all comprises everyone in the labor force and everyone who wants to hire workers. But not everyone in the labor force can match up with someone who wants to hire workers. This is a mishmash of procedures for finding a job, monetary policy, preferences of the labor force, preferences of employers, preferences of people who buy things that employers sell, and probably more. Are these all rules?
OK, I should have read the damned thing again. “Conventions” and “standards” cover socialized preferences perfectly well.
Not much time to write much this week but several short comments.
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On externalities see Sahlins paper I cited in previous thread.
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Note that there is an entire sub-discipiline of anthropology devoted to economics that is completely at odds with the modern discipline of economics. Concepts of exchange, reciprocity etc. understood in a much broader way than they are in economics are fundamental to anthropology as a whole.
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“Soft science”? You mean social science I think. Using a term like soft science is buying into neoclassical economics own characterization of itself vis-a-vis other social sciences, something you are supposedly critiquing.
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There’s a difference between neoclassical economics and neoliberalism. This is discussed by Mirowski and others.
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Also, the market is only a quasi-natural object in neoliberalism. This is a difference with earlier liberal thinking. In neoliberal theory a strong state is necessary to impose the conditions of the ‘market’. Foucault was one of the first to write seriously about neoliberalism but there are things he failed to grasp. His desire to “behead the king” made him blind to the importance of sovereignty. Neoliberalism is not pure governmentality. It became a force and has extended itself through crises, i.e. through states of exception. This is one of the points I understand Mirowski to be making in his Crisis book.